Wednesday, August 25, 2010

Guest Blog: Don't Bet on Hamilton...

This is a Guest Blog as part of the current competition we are running here on Puck Central

Recently there has been some chatter in the press about several fledging franchises that may be on the move including the Coyotes, the Islanders, and even the Oilers.

The Coyotes are often mentioned because of their lack of ownership and an arena that consistently produces small crowds. The Islanders are obviously brought up a lot because of Nassau County’s government refusal to get the Lighthouse Project moving and the Oilers have recently been in Canadian headlines for similar reasons. But you can always toss in the Blue Jackets, Thrashers and Panthers since the press likes to pick on their attendance woes.

Of course every beat writer north of the border keeps mentioning Hamilton as a possible city to relocate a hockey team to after Jim "Blackberry" Basillie's failed attempt to purchase and move the Coyotes there last summer. The idea seemed fabulous to some at the time since Balsillie was able to sell around 14,000 $100 deposits for season subscriptions. There were many owners who quietly would of liked to see Basillie succeed, but there was just one major obstacle that all of his billions of dollars couldn’t overcome.

And when I talk about the obstacles, I am not talking about the litigation process or the fact that Gary Bettman loathes the man. No the obstacle I am talking about is the lack of a brand spanking new arena.

First off, in order to understand relocation or expansion you have to first understand how hockey teams make money. Having previously worked for a professional sports team, I know that an arena lease can make or break a team financially. Counter to popular opinion, the reason why some teams are on the verge of bankruptcy has not to do with a struggling team's location geographically, but rather a building lease that is “tax friendly” and allows countless revenue streams from sponsors and season subscribers.

Old arenas, or in Columbus's case an arena with bad lease, just do not have the same revenue streams as teams with new arenas. For example, MSG is undergoing renovations. Why is this happening? It's not because the fans want it or need it, but because MSG needs to keep up with the Steinbrenner’s, the Wilpon’s, the Mara’s and the Johnson’s of the world.

What do other owners in other sports have to do with MSG?

It’s simple. There is only so much money in NY that can be spent on Luxury Boxes, Sponsorship, and Season Subscriptions. If you’re a big wig at a bank or a huge insurance company are you going to spend thousands of dollars on a luxury box in the ceiling of an arena, miles away from the game? Or are you going to spend that money on a state of the art luxury box right behind home plate? It’s an easy choice for corporations. These people rely on hospitality to conduct and grow their business.

The same concept goes for sponsors. You ever see the "PSE&G Powerplay" at The Rock. The entire arena is digitally lit up in sync with PSE&G logos. This makes marketers cream their pants. Take that same marketer who just experienced the Rock to MSG and all they get is 2 lonely LED boards. It’s not the same value. Not even close.

So how does all this tie together?

Hamilton doesn’t have a brand new spanking arena where they can attract the major players in sports sponsorship. Yes, there was a ton of support amongst fans in Hamilton, but without a new arena Hamilton never had a real shot.

It’s not about competing with Toronto or Buffalo, revenue sharing takes care of those owners. It’s not about marketing infringements or all that other BS you may have read about. It’s simply about the arena and money.

It’s why you keep reading about friggin Kansas City. Have you ever heard or read anything about a local craving for hockey in Kansas City? Hell no! But have you read about their new arena? I bet you have.

Although the NHL is unlikely to relocate or expand during a recession, if they do, I'd bet on Kansas City or somewhere else random with a new building. Unfortunately, cities where hockey might actually be successful such as Hamilton, Portland, or Seattle, you're probably already ruled out.

~The Suit
The Hockey Suit

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